Amazon has come out and defended its eBook pricing model arguing that a $14.99 or $19.99 is “unjustifiably high for an e-book.”
In a post on the Amazon Forums, the company argues that since eBooks don’t require printing, warehousing or transportation costs, they should be less expensive than print books. Here is more from the post:
It’s also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.